Analysis & Opinion

Jan 31 (Reuters) - Goldman Sachs said it was bullish on
crude oil on strong global demand that is growing well in
excess of non-OPEC supply, overriding concerns of potential
supply disruptions driven by political developments in the
Middle East.

Fears of instability in Egypt could spread through the
Middle East -- which, together with North Africa, extracts over
a third of the world's oil -- have sent Brent crude prices near
$100 per barrel. [ID:nLDE70U00B]

Goldman said the impact of the unrest in Egypt and Tunisia
-- neither of which are major oil exporters -- was overstated.

"Global oil demand-driven oil price increases are more
likely to result in higher equity valuations than supply
disruption-driven oil price increases," it said in a note.

The brokerage backed its "buy" on Apache Corp (APA.N) and
Occidental Petroleum (OXY.N), stocks most exposed to the Middle
East under its coverage.

The brokerage said the global oil demand is resulting in a
steady decline in inventories and OPEC spare capacity, leading
it back its base-case price deck for West Texas Intermediate
spot oil at $100 per barrel for 2011 and $110 for 2012.

U.S. benchmark crude CLc1 has risen 4 percent in the last
seven days, since the unrest in Egypt heightened.
(Reporting by Swetha Gopinath in Bangalore; Editing by Joyjeet
Das)